ESG Recruitment for Financial Services

Our ESG Specialist, Tom Dagwell, looks at the role of ESG and the challenges of identifying candidates for mid to senior-level positions.

ESG is more than a buzzword in the corporate world. Having been around for decades, the combined movement for environmental sustainability, social responsibility and governance is now being taken seriously. As with most shifts in corporate thinking, this comes down to competitive advantage and the realisation that sustainable management can also help to sustain profits. We live in an era where new corporate functions can emerge quickly, often driven by developments in technology, data and risk management. Exciting opportunities arise when this happens because linear career paths to senior positions are not yet established. ESG’s emergence is one of those moments.

Where Did ESG Come From?

Who Cares Wins was a mission statement for ESG back in 2004. It was supported by Kofi Annan’s United Nations and signed up to by 18 large investment banks, but although it had some effect on investment strategy, it couldn’t be seen as a “sea change” moment. Fast forward to 2020 and the climate crisis was being taken seriously by far more people. Against that backdrop, the COVID lockdowns arrived. These precipitated a move to hybrid working and also accelerated two other trends. The first was an increase in mental health issues and the second, not unrelated, was for work to have more meaning.

The great resignation started to emerge as we came towards the end of the lockdowns. In a recent blog we talked about people moving for pay rises, better hybrid working options and, for some, closer team collaboration. Another factor is the search for meaning, to work for a company that shares and demonstrably operates in line with a clear set of values that appeal to employee and client alike. Having a positive reputation across the spectrum of ESG is good for business. It has a positive effect on talent attraction and retention as well as encouraging investment and reducing risk.

ESG Recruitment

Scan the ESG professionals on LinkedIn and we see a surprising variety of profiles and career paths. Some of this comes down to the organisation in question. From start-up to scale-up, to national company to multinational, the scope and requirements for the role are different. We have made generalisations about companies and roles to provide the following commentary.

Given that ESG is good for business, there is no excuse for new and growing companies failing to adopt its guidelines. A successful candidate here is likely to be a relatively young graduate in business or finance with strong transferable skills. Like all ESG employee profiles, they are passionate about ESG. They are comfortable in the dynamic start-up environment and have a role that focuses more on governance and maintaining appropriate policy than pushing for change. With functional heads easily accessible, they are well-positioned to maintain influence and equipped to grow their knowledge and authority as the company scales up.

Moving up to medium-sized “national” companies, we see more of a mix. Some people at this level come to Lead ESG roles with scientific sustainability qualifications, some have expanded their roles from a CSR focus and others have built up expertise through involvement in sustainable investments. We still see people who have done short courses or simply stepped across from commercial roles. In a larger organisation, it’s more important to have the ability to build networks and influence stakeholders with different perspectives and priorities. Not only does a successful ESG Lead at this level need to connect existing compliant initiatives from different divisions, but they also need to be an authoritative agent of change. The relative newness of ESG means that some people with limited track records, transferable skills and passion for the subject can still step into these roles. The number of horizontal moves being seen is increased due to the competition for talent being so fierce across Financial Services in 2022.

In the largest corporations and institutions, the Head of ESG will ideally be an experienced professional with the ability to effect change, working with senior stakeholders across multiple functions, divisions and locations to unify sustainability and social impact initiatives, implementing a cohesive strategy and applying a consistent governance framework. The focus is more strategic and longer-term although swift change may be required in some areas. Many of the most expert candidates work as environmental consultants or management consultants with the big professional services firms so the remuneration requirements are high. Others for consideration include senior managers from HR, Compliance and Investment Management, senior Finance and Legal professionals and company secretaries. Anyone at a senior level involved with CSR, diversity, equity and inclusion [DEI], or privacy laws can also be a good fit.

The ESG Skillset

The required skillset for mid to senior-level ESG professionals is straightforward to write down but harder to find in a single individual. So, when it comes to recruitment, there is generally some room for compromise. Key aspects include strong communication skills enhanced by a good working knowledge of different business functions, strategy development and implementation expertise, stakeholder management and internal communications. Other competencies like regulatory compliance, law and governance, accounting, risk management and finance are all useful, as is being science-literate. While all of this sounds hard-edged and corporate, the mission is to make a company more successful by doing the right things for people and the planet so the leadership needs to have considerable soft skills, an empathetic approach and a strong belief in the value of ESG.

The Future of ESG

ESG will develop to become a shaper of company culture, meeting the needs of the customer base, workforce, regulators, potential employees and investors. As with IT or HR, it will affect everyone in an organisation. ESG departments probably won’t grow that large in their own right because some responsibilities will stay where they are now. Increasingly, people will go straight into ESG roles and have more linear career paths mapped out but there will always be the possibility for horizontal and diagonal moves. Over the coming years, ESG leaders will attempt to plot the roadmap between short term requirements and longer-term strategic goals, building on existing policy and remediating deficiencies. While the initial surge is likely to slow down and the availability of fully qualified candidates will increase, this will remain a varied and rewarding career option and one that may be at its most accessible right now.

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